EUR/CHF Outlook:
The EUR/CHF exchange rate is likely to decrease, as it is currently below its recent average and near recent lows. The ongoing geopolitical tensions are contributing to downward pressure on the euro.
Key drivers:
• Rate gap: The European Central Bank has maintained interest rates, while the Swiss National Bank keeps its rates at 0% to support the export sector, leading to a more favorable environment for the CHF.
• Risk/commodities: The significant rise in oil prices may negatively impact the euro, as higher energy costs can strain economic recovery in the Eurozone.
• One macro factor: The ongoing Russia-Ukraine conflict continues to create uncertainty, affecting economic performance and confidence in the euro.
Range:
EUR/CHF is likely to hold within its recent 3-month range as it trades near 90-day lows.
What could change it:
• Upside risk: A substantial improvement in German consumer confidence could bolster the euro.
• Downside risk: Further escalation of geopolitical tensions could intensify the euro's decline.
